Overview of ASC 842 and IFRS 16

The first effective dates for the new lease accounting standards, ASC 842 (US GAAP) and IFRS 16, will be in January 2019. The standards will require that all leases, both operating and finance, are moved on-balance sheet unless the lease term is less than 12 months. The on-balance sheet requirement of the new standards is creating a huge implementation challenge for many companies. The challenge is exacerbated for companies with large equipment leasing portfolios because equipment leasing programs are typically decentralized, making it difficult to track down the data needed to comply with the new standards.

To comply with the new standard by the effective date, you should have already:

Familiarized yourself with the technical accounting

Formed a project team

Begun collecting lease accounting data

Started exploring potential lease accounting and management software

CFOs, controllers, and treasurers should also focus on:

Developing policies and controls to ensure your company stays in compliance on day 2 of the new standards and beyond

Training all end users on the lease accounting and management software

To learn more about ASC 842 and IFRS 16, the affects the standards will have on your business, how to staff and budget for the implementation project, and what to look for in lease accounting software, visit our lease accounting page.